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🌏 China, EVs, and Tariffs: The Gist
Overview
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China's Electric Vehicle Market: A Tug-of-War With the EU
China's electric vehicle (EV) industry is under fire from the European Union, with a tariff dispute heating up and the future of Chinese-made EVs in Europe hanging in the balance. With Tesla, BYD, and Geely caught in the crossfire, China is pushing for negotiations while European lawmakers weigh punitive measures.
Meanwhile, China's automotive sector is seeing significant gains on the home front, with rising sales and production. Let's break down what's going on in China's automotive world right now.
China Proposes Negotiations to Ease EU Tariffs
China has opened the door to talks with the European Commission to resolve the ongoing tariff dispute surrounding EVs. At the heart of the issue is the EU's investigation into subsidies provided by the Chinese government to their EV manufacturers. In a meeting with the European Commission's director general for trade, Vice Commerce Minister Li Fei made it clear: China is ready to work towards a solution that benefits both sides.
Some Deets:
China seeks to avoid additional tariffs on its EVs exported to Europe, a critical market.
The European Union is considering lowering some tariffs, with Tesla's rate dropping from 9% to 7.8%. However, other brands like BYD and Geely won't see much relief, facing tariffs up to 18.8%.
These tariffs are in addition to the EU's standard 10% import duty on vehicles.
China's stance remains optimistic, but negotiations may face roadblocks as the EU looks to protect its own automotive industry from a flood of subsidized EVs. The final decision is expected in October, so buckle up for what could be a bumpy ride.
BMW's Brake Problems and China's Demand Slowdown
While China's EV exports are under scrutiny, German automaker BMW is feeling the heat at home and abroad. A significant hiccup with braking systems supplied by Continental has led to delivery delays and a dip in BMW's profit outlook. China, one of BMW's key markets, has shown weaker-than-expected demand, further dragging down the company's 2024 projections.
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More Deets (But Gloomier):
BMW's EBIT margin forecast dropped from 8-10% to 6-7%.
Over 1.5 million vehicles are affected by braking system issues, with 320,000 of those unable to be delivered until resolved.
BMW shares took a nosedive, down 9%, while Continental's stock followed suit.
In addition to the technical woes, BMW pointed out that China's economic stimulus measures have failed to revive consumer sentiment in the country's largest auto market. This highlights a broader trend of challenges automakers face in navigating the Chinese market's current unpredictability.
BYD Sets Aggressive Sales Targets
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On the flip side, China's EV giant BYD is charging full steam ahead. The company has set an ambitious goal to sell 4 million vehicles in 2024, representing an 11% increase over its original target. This move puts BYD on par with global heavyweights like Ford, which sold 4.4 million vehicles last year.
Even More Deets (Less Gloomy This Time):
BYD's new models, which have the latest plug-in hybrid technology, DM-i 5.0, are driving demand, with backlogs exceeding production capacity.
No plans for price hikes this year, despite high demand, with models starting at just over $14,000 (99,800 yuan).
August sales numbers hit a record-breaking 373,083, and BYD expects to sell around 418,000 vehicles per month in the fourth quarter.
BYD isn't just dominating at home—it's ramping up exports with plans to ship 450,000 vehicles overseas this year, which would be a double-digit percentage increase.
China's Auto Market Grows Despite Challenges
Despite global tensions and a volatile domestic market, China's automotive industry showed month-over-month growth in August. A mix of new policies aimed at vehicle scrappage, subsidies for NEVs (New Energy Vehicles), and the traditional sales peak of "Golden September and Silver October" have provided a much-needed boost.
Last Deets (We Promise):
August production: 2.492 million vehicles (+9% MoM, -3.2% YoY).
August sales: 2.453 million vehicles (+8.5% YoY, -5% MoM).
NEVs: 1.1 million sold (+30% YoY), with NEVs making up 44.8% of total sales.
The trend is clear—NEVs are the star of the show. This growth is happening even as many traditional auto sectors struggle. With both central and local government policies in play, it seems the next few months could be a strong finish for China's auto market.
China's Suppliers and EV Makers Expand Global Reach
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While China battles trade disputes and domestic demand, the country's auto suppliers and EV makers are making a big splash at the Frankfurt Automechanika trade fair. Nearly 900 Chinese auto suppliers are present, a sign of their growing influence in the global supply chain. As European tariffs loom, Chinese automakers like Geely and BYD are making clear they're not giving up on the market.=
"Even if some in Europe turn against us, we will never turn against the European market,"
Chinese automakers are investing heavily in expanding their global presence, even as Europe and North America try to limit their influence with tariffs. It's a high-stakes game, but China's auto industry isn't backing down.
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